The Reserve Bank of Australia (RBA) has left the official cash rate on hold at a record low 1.5 per cent at its first meeting of the year, citing continuing concerns about weak household consumption.

The central bank said data over the summer had been consistent with its central forecast for gross domestic product growth to pick up to average a bit above 3 per cent over the next couple of years. The RBA noted that the outlook for household consumption was a "continuing source of uncertainty".

Business conditions were positive and the outlook for non-mining investment had improved, while increased public infrastructure investment was also supporting the economy. "The low level of interest rates is continuing to support the Australian economy," governor Philip Lowe said in a statement on Tuesday."Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual."

However, the RBA noted that the outlook for household consumption was a "continuing source of uncertainty", with household incomes growing slowly and high debt levels. Earlier data showed retail sales eased more than expected in December after a barnstorming couple of months, but still posted a smart rebound in the final quarter of 2017 in a positive sign for household consumption and economic growth. Consumer spending has been under pressure from record-high household debt and sluggish wage growth, one reason the RBA has been in no rush to raise interest rates.

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